TomTom, Open Source, Microsoft and Death by Reactive Management

Rob Enderle

One of the big complaints about the Obama administration is that it is reactive and, as a result, is increasingly seemingly ineffective in keeping the nation's focus on the real problem (the economy, if anyone was guessing) and actually fixing anything. To my eye, the Obama administration is starting to remind me way too much of President Carter's administration, and this has more to do with management practice than ideology.


Sun employed a similar management style, focusing excessively on Microsoft and losing its way to such an extreme degree that it apparently is now facing being absorbed by a vastly better-run IBM. FLOSS, even down to the name "FLOSS," seems reactive by nature as well, and the result of a reactive management style is seldom a good thing.


Let's talk today about reactive management and why it can be a suicidal practice.


Primary Cause: Lack of Strategy


Reactive management styles typically suggest either bad strategic thinking or a complete lack of it. In its reponse to Netscape (bet you thought I was going to use another example), Microsoft had been clearly napping with regard to the importance of the browser and responded in force. But rather than focusing sharply on the problem, it focused an excessive amount of effort on putting Netscape, which was in the process of failing anyway, down, resulting in an adverse anti-trust ruling that has an incredibly long and expensive tail and still could eventually put Microsoft out of business.


When I did the post-mortem on IBM's crash in the late 80s, one of the major causes was its own consent decree coming out of a similar anti-trust action against it decades earlier. These things are company-killers because they have incredibly long tails and force massive amounts of inefficiency and bureaucracy into an otherwise well-run firm. This in turn focuses management on short-term tactics in order to show growth, and those tactics eventually create a strategic failure.


Had Microsoft thought strategically about where the market was going, rather than focus solidly on Netscape and where the market was, it might have fixed MSN sooner (which really had a massive strategic focus problem), saw search before Google did (though likely could have still missed advertising because that was non-linear thinking), and a platform like Azure could have arrived around five years earlier. This focus might have also prevented the decline of Internet Explorer's market share from a high of 91 percent in 2004 to around 67 percent today. Realize the company lost this market share to a product, Firefox, that is maintained largely by a bunch of hobbyists and volunteers.

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Mar 23, 2009 11:55 AM obvio capitao obvio capitao  says:

TomTom tells Ballmer tear down this wall

By joining the Open Invention Network TomTom made its most important statement yet that it won't get pushed around in its patent litigation with Microsoft.

OIN members include important players like IBM, Philips and Sony. On the other hand they also include Novell, whose original patent cross-license with Microsoft drives the controversy over Big Greens claims to own the Linux operating system.

By joining OIN TomTom lays claim to over 275 important patents and patent applications, at the cost of releasing its own IP to members.

OIN boilerplate is pretty clear on this, saying it is creating 'a supportive and shielded ecosystem to ensure the growth and adoption of Linux.'

It's one thing to intimidate a small company like TomTom, a Dutch maker of GPS systems who press reports say is struggling to survive.

It's another one to take on the OIN and all its members. But given Novell's paid leadership in the OIN group you have to ask whether TomTom didn't also just find a way to finesse this thing if the going gets tough.

Over at Consortiuminfo Andy Updegrove writes that the TomTom legal strategy can be compared with Ronald Reagan's strategy of economic confrontation with another empire.

Just as the iron curtain eventually fell when the illusion of the Soviet economic model could no longer be sustained, I believe that Microsoft's anti-FOSS strategy will eventually collapse as well - not from assault from the field, but due to an uprising from within.

Or, put more simply, Mr. Ballmer, tear down this wall.


Mar 23, 2009 3:54 PM Rob Enderle Rob Enderle  says: in response to obvio capitao

Recall that was said by a very strong US to a weakening USSR.  If this had been said by IBM and not Tom Tom, I think this might play this time.  In this case it would be like Iceland saying this to the US.   If you've tripped fallen and are in the process of dieing it is really hard to get the other guy to take your bluster seriously.  Tom Tom should likely be focused 100% on surviving at the moment and avoiding the declarations of war. 

Mar 24, 2009 12:17 PM obvio capitao obvio capitao  says: in response to Rob Enderle

Except that Andy Updegrove is not TomTom.

Mar 24, 2009 12:31 PM obvio capitao obvio capitao  says: in response to Rob Enderle

Tom Tom should likely be focused 100% on surviving at the moment and avoiding the declarations of war. 

As always, you are promoting Microsoft's agenda...

The reason the licensing question matters is the message that it sends:  Microsoft has for years been approaching vendors alleging that it owns 235 patents that it claims are infringed by popular open source software, and that several dozen of these patents are infringed by any software distribution based upon the Linux kernel.  These discussions are always behind the scenes, but when Microsoft succeeds in reaching agreement with a significant vendor, and especially a Linux vendor (like Novell), Microsoft makes an announcement, and puts another notch in its gun.  The next time it visits a vendor - or even an end user - that list gets to be longer, and the person receiving the next visit is tempted to think that there must be a basis for all those other companies signing on the dotted line.  So, it would appear, the smart thing would be to get in line as well.

Of course, the terms of these settlements are never released - which is an integral part of this type of patent infringement strategy.  In fact, the person visited may not have had to pay anything at all.  Indeed, the balance of value may have been in the opposite direction.  Or the patents Microsoft claims may be infringed by Linux may simply be thrown in along with patents the other party really needed a license for.

All of which puts a vendor like TomTom in a very difficult position.  If it had taken the license Microsoft offered a year ago, then have been added to the lengthening list.  If it settles now, after Microsoft's suit has attracted so much attention, the terms will certainly be kept secret - and Microsoft will then have a notch of real power to add to its gun - it took a vendor to court, and under threat of suit, the vendor buckled.  Surely that must mean that the patents are serious, right?

Well, not necessarily.  Companies settle patent suits all the time for purely economic reasons: it's cheaper to fold then fight, and particularly so if the plaintiff is more interested in being able to say you folded than in any license income.

Now, though, TomTom has added a new dimension to the dispute that changes the game, and allows for multiple possible interpretations of any settlement that may end the dispute.  Without question, the legal basis of the settlement would be a cross license between the companies that allow each company to use a list of stated patents of the other, thus removing the basis for the original suit, and then the second suit.


Mar 24, 2009 6:50 PM Rob Enderle Rob Enderle  says: in response to obvio capitao

But only if they make it to court or through a negotiation.  Right now they are failing.  This all seems to be a huge distraction for them when they should be fucused 100% on making it through the next quarter.   Every time they make the news generally someone says they are going out of business and who wants to buy a product from a firm that is failing?

As to Microsoft's agenda they don't get a cent unless Tom Tom survives and they don't get case law (were they really targeting Linux which is doubtful given Red Hat would be a vastly better target were that the goal) either. 

The press coverage for both companies is hardly positive but Microsoft isn't in danger of closing its doors and Tom Tom's efforts are not only making its survival less likely by focusing attention on their problems they are scaring away any buyers for the firm as well.  

It's reactive and takes focus from where they need it and that is getting their costs in line with crashing revenues before they run out of cash (which may have already happened). 


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